I fixed it. Autozone has an tester that checks the rectifier and the voltage regulator. and it checked out there and another place.
I called a friend over and told him how everything seems to work but my dash light is not working. but it does work when it is grounded by the light tester. The first thing he did was start to check continuity from the wires at the alternator to the battery. The 12v wire hooked up the the negative ground showed a massive resistance. We checked different sections of the circuit and found the resistance to be in the 12v terminal on the firewall. I added star washers to all the eyelets on the terminal and it was fixed. (I buy star washers in bulk for all my electrical connections)
Reading Warthogs post about connections I did change the white exciter plug to the alternator and I added star washers to the other connections on the alternator. I had also cleaned all the connections on the instrument panel and bought a new relay. I had read a post about cleaning the terminals on the firewall, but did not act on it because:
1) The outer eyelets were clean and looked brand new (shame on me for not checking underneath. I had fixed those connections at a time before I put star washers on everything.)
2) Knowing that it was some sort of ground problem, I was not realizing that the 12v hooked to isolated ground on the alternator is actually the ground even though it is 12v. It makes perfect sense now.
I asked my friend if there is any indicator that there might be resistance/connection problem and he said that other than load testing the wire, sometimes it will show reduced voltage. I remembered when I was checking all my voltages I was getting a reduced reading on the 12v isolated ground wire. I have learned a valuable lesson.
This was an odd problem because every wire had the right voltage and checked out ok with light tester. I hope this post helps someone in the future.
Thanks to everyone.